Paying Ch13 - can I put a little extra into my interest-only mortgage?

[goldstar]

I am less than a year into my chapter 13 (5 yr plan). I have a 30 yr first mortgage on my house I got to keep. The first 10 yrs are interest-only. I bought it in 6/06 so I'm 5 yrs into the home. We pay the Mortgage bank directly - not part of our payment to the trustee ea mo. Any extra applied to the principal reduces every future monthly mortgage pmt as a reward for the reduced principal - until the interest only period ends.

Again, I have about 5 yrs left, and then the remaining 20 yrs will be fully amortized at which point my minimum payments will go up significantly if I will have not paid down the principal. I can save up $ in the coming 4.5 yrs and throw it all into the mortgage just before the i/o period finishes...just after discharge. However, the smart thing would be to pay whatever we can reasonably put aside into the monthly payment.

I'm talking paying an extra $100-200/mo into the mortgage ea mo (I pay over 2k/mo into my plan so this would be small in comparison). That said, my attorney cautioned me against this while we were filing. Now, it's hard to get a hold of him so I'm not sure what his position would be now that we're well under way post-confirmation. Wondering if anyone here on the board has some insight on this? Can I get in trouble for paying down the first mortgage during the pmt plan period? Others have told me to save up for the next 4.5 yrs and when I come out of discharge throw all that $ into the first mortgage. I just figured why not save $ along the way if I can with lowering interest paid in the coming 4.5 yrs. Thoughts? Thx in advance.

[Mayo]

Myself, I would save the extra money in a savings account for at least 2 more years. Build up a nest egg in case of some unforseen tragedy. Maybe the last year and half on the 13 pay on the principal if you desire. After 13 if you still live like you did during the 5 yrs you could tackle the hell out of that mortgage with 2K a month.

[justbroke]

My only question is this... was your "interest" payment included in your Chapter 13? What I'm asking is, was your Chapter 13 plan calculated as if you were paying interest? If was not, why not?

[goldstar]

Thx Mayo

Thx Mayo. That makes a lot of sense, on several levels.

Nevertheless, I'm still wondering...if say after 2 yrs I begin to pay down principal, per my original post, if that could be problematic...DOES ANYONE KNOW FOR SURE?

[goldstar]

Yes, of course. What I'm saying is...if I have a bit extra in the course of my payback with good saving/budgeting, will I be "penalized" in any way for paying down my first mortgage in advance?

[catleg]

I would strongly discourage throwing "good money after bad" in any real estate at this time. Unless you have a super high interest rate. Better to keep the money in an emergency fund, keeping in mind it's going to be constantly losing purchasing power.

[justbroke]

Goldstar, if you're not required to pay it, I don't know that I would in the context of a Chapter 13. You are better off you doing your I/O payment and saving the rest for an emergency. If your home is not underwater by the time that your Chapter 13 ends or the I/O period ends, whichever comes first, then you can make a lump sum payment with the savings.